UPDATE 3-Sanofi sticks to Genzyme offer as raises FY goal

* Sees no reason to change Genzyme offer

* Sees FY EPS growth at constant rates of 0-2 pct

* Q3 net income 2.47 bln euros vs f’cast 2.31 billion

* Q3 sales rise 5.7 pct to 7.82 bln euros vs f’cast 7.63 bln

* Expects cost savings to exceed 1.2 bln euros this year

(Adds CEO, analysts’ comments, shares)

By Caroline Jacobs

PARIS, Oct 28 (BestGrowthStock) – Sanofi-Aventis (SASY.PA: ) said it
was “not obvious at all” it would need to lift its hostile $18.5
billion bid for Genzyme as quarterly earnings beat forecasts and
let the French drugmaker lift its profit target for the year.

Genzyme (GENZ.O: ) executives last week began a quest to show
the U.S. biotech group is worth more than the $69 a share Sanofi
has offered, saying based on their new 2011 earnings forecast
its value could be as much as $89 a share. [ID:nN22162250]

But Sanofi Chief Executive Chris Viehbacher didn’t buy into
what he called Genzyme’s “rosy” forecasts, saying on Thursday
Sanofi would stay “patient and disciplined” and keep all options
open while still wishing to discuss with Genzyme’s board the
company’s value.

“Some of it (the Genzyme presentations) confirmed our
assumptions … and some of it seems quite unrealistic. The
bottom line is, we didn’t hear anything of substance that would
cause us to change our $69 per share offer,” Viehbacher said.

“While it is encouraging to see the company is making
progress on some fronts, as expected, we … think some of
Genzyme’s financial targets ignore the realities of the market
and the company’s current situation,” he told a conference call.

He referred to Genzyme’s recovery from a manufacturing
crisis that had led to the shortage of two key drugs and earlier
this year dogged its shares, but also said the company had a
track record of missing its financial forecasts.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For Genzyme deal calculator: http://r.reuters.com/het92n

For GRAPHIC on drugs sector: http://r.reuters.com/xaw97p

For other stories on Genzyme bid battle: [ID:nN20244039]

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Sanofi shares rose as much as 2 percent and were up 1.5
percent at 50.26 euros by 0835 GMT, outperforming the wider drug
index (.SXDP: ). Sanofi’s competitor

AstraZeneca (AZN.L: ) also on Thursday improved its earnings
outlook for the year. [ID:nLDE69P0RT]

Analysts and investors widely expect Sanofi will need to
raise its offer, which expires on Dec. 10, to get its hands on
Genzyme, but Viehbacher wouldn’t hear of it.

“It’s not obvious at all,” he said, pointing out that
Genzyme shares had barely reacted to the U.S. biotech’s latest
forecasts. Genzyme shares closed at $72.07 on Wednesday.

“Obviously Genzyme are pushing the bull case, but Sanofi are
not biting,” Navid Malik, Matrix Corporate Capital analyst said.

“I think they (Sanofi) should stay firm with the price. They
might eventually raise it to $71 (a share) but I don’t see them
raising it much higher than that.”

Genzyme’s rare diseases would add a new growth area for
Sanofi, speed up the rebuilding of its drug pipeline, boost its
U.S. presence and steer it through to 2013 when copycat drugs
will erode about a third of Sanofi’s 2008 sales base.

NEW GOAL

Still, cost control and a good performance by growth
platforms, emerging markets in particular, allowed Sanofi to
raise its guidance for the year. Emerging markets account for
nearly 30 percent of group sales and grew to 2.3 billion euros.

Sanofi expects earnings per share (excluding amortisation
and certain one-off items) to grow 0 to 2 percent at constant
exchange rates instead of its earlier forecast of a drop of as
much as 4 percent.

The new goal takes into account generic competition in the
United States for sleeping pill Ambien CR, as well as the
possible launch of cheaper copies of cancer drug Taxotere and
further erosion of sales of bloodthinner Lovenox, Sanofi said.

Third-quarter earnings beat the Reuters poll on all fronts,
helped by an increasing contribution from its growth platforms
including consumer healthcare, vaccines and diabetes, as well as
a favourable exchange rate.

Net income excluding amortisation and one-offs rose 8.9
percent to 2.47 billion euros ($3.4 billion), but fell 2.2
percent at constant exchange rates, compared with an average
outcome of a Reuters poll for 2.31 billion.

Sales rose 5.7 percent to 7.82 billion euros against a
forecast 7.63 billion, but fell 1.7 percent at constant exchange
rates as generic competition mounted.

“The results are a bit better than expected thanks to
vaccines which have allowed to make up for slightly
disappointing pharmaceutical sales,” said Eric le Berrigaud,
analyst at Raymond James. Vaccine sales rose 9 percent.

Lovenox, Sanofi’s second-biggest selling drug last year,
became the latest to face generics. Bloodthinner Plavix and
cancer drug Eloxatin already face limited generic rivalry.

Lovenox sales fell 26 percent at constant currencies to 589
million euros after Sandoz’s (NOVN.VX: ) and Momenta’s (MNTA.O: )
cheaper biosimilars exceeded expectations in the third quarter.

Next in line facing copycats is Taxotere, which targets
several cancer forms like lung and prostate cancer. Hospira
(HSP.N: ) expects to launch an injectable generic this year.

Analysts and Genzyme investors polled in August showed
expectations for a deal to be done at an average $78 a share.

Sanofi expected cost savings this year to exceed 1.2 billion
euros at constant exchange rates from its 2008 cost base.
(Additional reporting by Noelle Mennella and Ben Hirschler,
Editing by David Holmes and Michael Shields)

($1=.7261 Euro)

UPDATE 3-Sanofi sticks to Genzyme offer as raises FY goal